The U.S. property/casualty insurance industry is expected to see underlying growth decrease 3.7% for the first half of 2026 as it deals with economic uncertainty.
The industry grew 1.6% in 2025, but a report from the Insurance Information Institute (Triple-I) and Milliman said replacement costs are projected to grow 2.1% for the first half 2026. Replacement costs are forecast to exceed U.S. inflation by 2028, “reinforcing the need for continued price discipline across P/C lines,” according to the report.
The look-ahead hinges on the Federal Reserve’s interest rate decisions, with a holding pattern currently in place as the market monitors unemployment rates.
Industry growth recovery isn’t expected until 2027 and 2028, Triple-I and Milliman said.
“Replacement costs moderated significantly from their 2022 peak, but our forecasts show them re-accelerating through 2028 and eventually outpacing overall U.S. inflation,” said Patrick Schmid, chief insurance officer at Triple-I. “While underwriting conditions have strengthened in some property lines, the industry faces a challenging road ahead with elevated catastrophe exposure, economic uncertainty and persistent claims-cost pressures.”
Triple-I and Milliman found the industry’s net combined ratio (NCR) for 2025 was the lowest in more than 10 years. General liability and commercial auto were the only major lines with a 2025 net combined ratio of above 100. In personal auto the net combined ratio of 91.8 for 2025 improved 3.5 points from the prior year. However, net written premium growth slowed to the lowest level since 2021 at 4%.
And in homeowners, underwriting results were also very favorable with the 2025 NCR finishing at 88.1—the lowest in over a decade—as insurers took pricing actions to match increased catastrophe activity. Insurers did benefit from no landfalling hurricanes in 2025.
According to a new report from insurance industry rating agency AM Best, rate increases for homeowners and private passenger auto insurance dropped in 2025 following several years of significant rate increases.
Related: US Personal Lines Insurers Ask for Less Rate After Period of Catch-Up
Topics Trends USA Property Casualty Market
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